Moving Can Change Your Tax Situation
Relocating to a new state affects your state income taxes, residency status, deductions, and potential tax refunds. Some states have no income tax, while others may still require you to file even after you move.
To avoid surprises at tax time, this guide explains how moving impacts your taxes, which states have tax advantages, and how to correctly file your tax returns after a move.
1. Do You Have to File Taxes in Two States?
📌 If you moved to another state in 2024, you may need to file two state tax returns in 2025:
| Situation | Do You File in Two States? | Tax Return Type |
|---|---|---|
| Moved to a new state and worked in both | ✅ Yes | Part-Year Resident Return |
| Earned income in two states but didn’t move | ✅ Yes | Nonresident Return |
| Moved to a state with no income tax | ❌ No (if no income in previous state) | Single-State Return |
📌 Example:
- You lived and worked in California until June 2024, then moved to Texas (no state tax).
- You must file a part-year resident return in California for January–June.
- You do not need to file a Texas return.
💡 Tip: If you worked remotely for a company in another state, you may still owe taxes to your former state.
2. What Is a Part-Year Resident Return?
📌 If you moved mid-year, you’ll file a Part-Year Resident Tax Return in both states.
✔ You only pay taxes on income earned while living in each state.
✔ Some states use income allocation, where you report what portion of your total income applies to each state.
✔ Tax rates differ—you could owe more or less depending on the states involved.
📌 Example:
- You earned $80,000 in 2024:
- $40,000 while living in New York (Jan–June).
- $40,000 while living in Florida (July–Dec, no state tax).
- You pay New York state tax on $40,000 but nothing to Florida.
💡 Tip: If you moved to a no-income-tax state, file a final return in your old state to close your tax account.
3. What If You Work in One State but Live in Another?
📌 If you live in one state but work in another, you may have to file a nonresident tax return for the work state.
✔ Some states have tax reciprocity agreements to prevent double taxation.
✔ Without reciprocity, you may owe taxes in both your work state and home state (but can claim a tax credit).
📌 States With Tax Reciprocity Agreements:
| Work State | Reciprocity With |
|---|---|
| Pennsylvania | NJ, OH, MD, VA, WV, IN |
| Illinois | IA, KY, MI, WI |
| Virginia | DC, KY, MD, PA, WV |
| Arizona | CA, IN, OR |
📌 Example:
- You live in New Jersey but work in New York.
- NY does not have reciprocity with NJ, so you pay NY taxes and claim a credit on your NJ return.
💡 Tip: Check if your new and old states have reciprocity to avoid paying double tax!
4. Which States Have No Income Tax?
📌 Moving to a no-tax state can save you thousands per year!
✅ States with NO State Income Tax (2025):
✔ Alaska
✔ Florida
✔ Nevada
✔ South Dakota
✔ Tennessee
✔ Texas
✔ Washington
✔ Wyoming
📌 Example:
- You earned $100,000 and moved from California (9.3% tax rate) to Texas (0% tax rate).
- You save $9,300 per year in state taxes!
💡 Tip: Even in no-tax states, you may still owe property taxes, sales tax, and local taxes.
5. When Do You Become a Resident of the New State?
📌 States determine residency based on several factors:
✔ Where you physically lived for at least 183 days (6 months).
✔ Where you own or rent a home.
✔ Where you register your car and driver’s license.
✔ Where you vote and receive mail.
✔ Where your employer is located.
📌 Example:
- You moved from New York to Florida on July 1, 2024.
- If you spent more than 183 days in Florida, you’re considered a Florida resident for tax purposes.
- File a part-year return for New York and no return for Florida.
💡 Tip: If your old state suspects you’re still a resident, they may audit you and demand back taxes—keep proof of your move!
6. How to Avoid Paying Taxes in Your Old State
🚨 Some states are aggressive about taxing former residents. To fully “break ties” with your old state, do the following:
✅ 1. Update Your Address & Legal Documents
✔ Change your driver’s license & voter registration to your new state.
✔ Update your mailing address with the IRS, banks, and financial accounts.
✔ Register your car in the new state and cancel registration in the old state.
✅ 2. Sell or Rent Out Property in Your Old State
✔ If you own property in your old state, tax authorities may still consider you a resident.
✔ If keeping the property, rent it out and report it as an investment.
✅ 3. Work for an Employer Based in Your New State
✔ If you work remotely for a company in your old state, you might still owe taxes there.
✔ Ask your employer to update your state tax withholding.
📌 Example:
- You move from New York to Florida, but your company is still based in NY.
- If NY withholds taxes, you must file a nonresident return and may owe NY state tax.
💡 Tip: Some states audit former residents—keep records proving your move (lease, utility bills, employment change).
7. How to File Taxes After Moving to a New State
📌 Follow these steps to correctly file your taxes after relocating:
✅ Step 1: Determine Your Residency Status
✔ Check if you’re a part-year resident or nonresident in your old state.
✅ Step 2: Gather Income Information by State
✔ Divide wages, self-employment income, rental income, etc. between states.
✅ Step 3: File a Part-Year or Nonresident Tax Return
✔ Use your W-2 or 1099 forms to determine how much you earned in each state.
✔ If applicable, claim a tax credit in your new state for taxes paid to the old state.
✅ Step 4: Check Your Withholding & Estimated Taxes
✔ If your employer still withholds taxes for your old state, submit a new W-4.
✔ If self-employed, update quarterly estimated tax payments.
💡 Tip: Use tax software like TurboTax, H&R Block, or a CPA to simplify filing in multiple states.
Moving States? Plan for Tax Changes!
📌 To handle your taxes properly after moving:
✔ Determine if you need to file in two states (part-year or nonresident return).
✔ Understand residency rules (183-day rule, driver’s license, property ownership).
✔ Take advantage of no-tax states if you relocate.
✔ Ensure your employer withholds taxes for the correct state.
📌 Need help filing taxes after a move? Contact First Union Tax for expert guidance on multi-state tax filing!
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